Switzerland shuts down fake cryptocurrency and conducts investigations

In the aftermath of China making the decision to shut down all Beijing-based cryptocurrency exchanges, other countries are tightening their grip on cryptocurrencies in their region as well. Switzerland's financial watchdog, FINMA, investigated what it thought was a fake cryptocurrency. On finding out it was indeed the case, it shut the service down.

The organization in question is QUID PRO QUO, which sold E-coins as their cryptocurrency tokens. They had been in operation for more than a year, amassing more than 4 million Swiss Francs ($4.2 million) in the meantime. Hundreds of users had purchased these E-coins, leading to the developers earning this money. QUID PRO QUO differed from other cryptocurrencies in that the E-coins were not stored on distributed networks. Instead, they were all stored on their own servers, without involving blockchain technology.

FINMA suspects three more organizations are selling fake cryptocurrencies, while it said it is conducting 11 investigations already of similar nature. The move comes as a result of the Swiss Finance industry trying to crack down on organizations that use the country to evade taxes. Switzerland is famed for respecting the transactions privacy and keeping your details private. However, a global wave of chasing after tax evasion has seen the country’s bank laws change in recent years.

As for cryptocurrencies, many believe that a lot of them are fraudulent in nature. This is because cryptocurrencies are different from traditional banks in that there’s no regulatory control involved. The developers who create the cryptocurrency are the ones overseeing it, and the operation of the cryptocurrency relies on its users who mine the tokens and verify transactions.

While people against it claim this is bad, supporters point to this very fact being the one making cryptocurrencies better than banks. With no single controlling power and the reins in the hands of users all over the world, it provides for a decentralized system that allows quick transactions without involving the transaction charges, not as much as banks at least.

Many, though, continue to believe that almost all cryptocurrencies are stealing peoples’ money and will soon crash. Jamie Dimon, Chief Executive at JPMorgan, said last week that even bitcoin is a fake currency and will eventually ‘blow up’. Regulators and banks are also trying to understand the operation of cryptocurrencies better to help prevent their usage to fund underworld activities.

It is true that the anonymous nature of payments using a good cryptocurrency attracts criminals to use them for their nefarious payments. However, that’s not the service’s fault. Many understand that, while some doubt it. All the while, cryptocurrencies continue to remain in operation. This news from Switzerland shows that many people can con users by creating a fake cryptocurrency and stealing a bunch of their money.